Rabinowitz v. Kelman

Background

Benzion Rabinowitz sought confirmation of an arbitration award under the Federal Arbitration Act, a federal statute governing arbitration agreements and awards. The dispute arose after the parties entered into a settlement agreement dated February 8, 2018. The agreement required Levi Kelman to pay Rabinowitz $5,200,000 in installments in exchange for a release of claims.

The parties later appeared before a three-member rabbinical arbitration panel. On January 3, 2021, the panel awarded Rabinowitz $4,000,000 and attorney’s fees. On April 27, 2023, the panel issued a supplemental award specifying the amount of attorney’s fees.

Rabinowitz initially moved to confirm the award in this court. The court dismissed that petition for lack of subject-matter jurisdiction, but the United States Court of Appeals for the Second Circuit vacated the dismissal and remanded the case. The Second Circuit held that Rabinowitz had adequately pleaded diversity jurisdiction and that the agreements’ permissive forum-selection provisions allowed the case to proceed in this court.

Motion to Transfer Venue

Kelman asked the court to transfer the case to the United States District Court for the District of New Jersey under 28 U.S.C. § 1404(a), which permits transfer for the convenience of the parties and witnesses and in the interest of justice. Kelman argued that most of the properties involved were in New Jersey, the arbitration took place there, and relevant witnesses, documents, and facts were located there. He also relied on the related case pending in the District of New Jersey and argued that the settlement agreement was a contract of adhesion.

The court denied the transfer request. It gave significant weight to Rabinowitz’s choice of New York because Kelman was a New York resident and Rabinowitz sought to enforce the award where Kelman and his assets were located. The court found that Kelman had not provided sufficiently specific evidence about the witnesses and documents that would be burdened by keeping the case in New York. It also noted that this court had greater familiarity with the matter because Rabinowitz filed here first, while the New Jersey action had remained stayed.

The court did not consider Kelman’s contract-of-adhesion argument because he did not identify the applicable law or adequately support the argument. The court concluded that Kelman had not shown inconvenience or prejudice sufficient to overcome the deference given to Rabinowitz’s choice of forum.

Motion to Confirm the Arbitration Award

The court applied the Federal Arbitration Act because the agreements did not specify which arbitration law would govern an enforcement action in federal court. Under that statute, an arbitration award generally must be confirmed unless a party establishes one of the limited grounds for vacating, modifying, or correcting it.

Kelman argued that the award was not final until the panel issued its April 27, 2023 supplemental award concerning attorney’s fees. The court rejected that argument. It held that the January 2021 award finally resolved the substantive issues submitted to arbitration by determining that the settlement agreement remained in force and that Kelman owed Rabinowitz $4,000,000 and reasonable attorney’s fees. The panel’s later calculation of attorney’s fees did not prevent the earlier award from being final.

Because the January 2021 award was final, Kelman’s challenge to it was subject to the Federal Arbitration Act’s three-month deadline and was untimely. The court therefore stated that Kelman’s motion to vacate the arbitration award was properly denied as untimely. The court also noted that Kelman did not challenge the supplemental award specifying attorney’s fees.

The court separately addressed Kelman’s argument that the arbitration panel exceeded its authority by consulting outside experts and considering their opinions. The arbitration agreement allowed the arbitrators to use any procedure they chose and contemplated costs for experts needed to reach a decision. The court held that consulting experts was within the panel’s authority. It further concluded that Kelman had not met the high burden required to vacate an award on the ground that arbitrators exceeded their authority.

Disposition

The court granted Rabinowitz’s motion to confirm the arbitration award and denied Kelman’s cross-motion to transfer venue. It directed the Clerk to enter judgment for Rabinowitz for $4,000,000 plus $94,649.58 in attorney’s fees, totaling $4,094,649.58. The Clerk was also directed to terminate the motions and the action.